Truist Securities reduced its price objective for Qualys (QLYS) to $120.00 from $130.00 on Friday while leaving the stock on Hold. The revised target sits below the stock’s recent trading level of $127.81 and near the low end of the analyst target range, which spans from $117 to $170. Data indicate that Qualys is trading below its fair value, implying potential upside despite Truist’s cautious stance.
The analyst action follows Qualys’s fourth-quarter 2025 financial report, in which the company outperformed its own guidance at the high end for both revenue and earnings per share. For the full year, Qualys posted revenue of $669.12 million, delivered strong gross margins of 82.85%, and reported diluted earnings per share of $5.44.
On a quarterly basis, Qualys reported fourth-quarter EPS of $1.87, ahead of the $1.78 analysts had expected, and revenue of $175.28 million versus the forecasted $173.15 million. These results underline the firm’s ability to beat expectations in both sales and profitability for the period.
Despite the favorable results, Truist pointed to a slight weakening in customer retention dynamics: net dollar retention eased to 103% from 104% in the prior quarter as newer product offerings continue to scale. The research team also noted that Qualys’s initial fiscal 2026 guidance, while exceeding consensus at the midpoint, signals a deceleration in the rate of revenue growth.
Qualys issued preliminary revenue guidance for fiscal 2026 with a midpoint of approximately $721 million, versus analyst consensus of $718 million. The company’s guidance implies roughly 10% revenue growth for FY2026, and analysts have modeled EPS of $7.08 for the year. Truist, however, emphasized that the guidance equates to an expected year-over-year growth deceleration on the order of about 230 basis points.
In response to the quarter and the outlook, Truist adjusted its internal estimates for Qualys. The firm highlighted several potential upside levers, including partner-led distribution and vendor consolidation, which could help re-accelerate revenue growth if realized. At the same time, Truist said it requires more clarity on the commercial impact of newer product initiatives, notably ETM (Extended Threat Management), before adopting a more constructive view.
No analyst upgrades or downgrades were reported in conjunction with these developments. Investors have shown confidence in the company following the earnings release, buoyed by the beats in both revenue and earnings. Nevertheless, Truist’s lower price target reflects the firm’s caution on near-term growth momentum despite the company’s solid margin profile and recent outperformance relative to guidance.
Key takeaways
- Truist lowered its price target on Qualys to $120 from $130 and kept a Hold rating.
- Qualys beat expectations for Q4 2025 revenue and EPS and reported full-year revenue of $669.12 million with 82.85% gross margins.
- Guidance for FY2026 projects about $721 million in revenue at midpoint, implying 10% growth but a roughly 230 basis-point deceleration year over year.
Risks and uncertainties
- Visibility on the contribution of newer products such as ETM remains limited, creating uncertainty around growth re-acceleration.
- Net dollar retention ticked down to 103% from 104%, indicating potential pressure on revenue expansion from existing customers.
- The guidance-driven slowdown in year-over-year revenue growth could affect investor sentiment, particularly in the cybersecurity and enterprise software sectors.